Does Chapter 7 Bankruptcy Fall Off a Credit Report?

Learn how long Chapter 7 bankruptcy (and Chapter 13 bankruptcy) will stay on your credit report.

Most people file a bankruptcy case when they need to put financial problems behind them and get a fresh start. Part of that fresh start often involves improving a credit score, and filers can take positive steps by paying bills on time and keeping credit balances low. Even so, it can take up to ten years for the bankruptcy to fall off your credit report, depending on the bankruptcy chapter that you file.

What's On Your Credit Report?

You might be surprised at the amount of personal data your report contains. Specifically, you’ll see three types of information:

  • identifying information, including your current and past addresses and employers
  • credit accounts and your payment history (such as accounts marked paid as agreed or charged off), and
  • public records, like judgments, tax liens, and bankruptcies.

Bankruptcy Reporting on a Credit Report

Most negative entries, like slow payments and charge offs, will disappear from your report after seven years. It works a bit differently for bankruptcy filings and depends on the particular chapter.

  • Chapter 7 bankruptcy. The fact that you filed a Chapter 7 bankruptcy will stay on your credit report for up to ten years. At the ten year mark, the credit bureaus should stop reporting the bankruptcy.
  • Chapter 13 bankruptcy. In this chapter, the filer pays into a repayment plan for three to five years. The Chapter 13 bankruptcy filing appears on a credit report for seven years from the filing date, which is only two years beyond the longest repayment plan. This benefit serves as an incentive to filers to choose the repayment option and to repay creditors something over time.

The immediate effect of bankruptcy on your credit score will depend on whether you initially had a high or a low score, and, in most cases, a higher initial score will take a bigger hit. The exact effect is hard to predict because scoring companies keep the formulas used to calculate scores somewhat secret. However, if you’re diligent, it’s not impossible for you to reach a credit score in the 700s (very high) just two or three years after you file your Chapter 7 matter.

Checking a Credit Report for Accuracy

It’s prudent to review your credit report from time to time, even if you aren’t considering bankruptcy. One way to check is by taking advantage of the free copy from each of the three major credit bureaus—Experian, TransUnion, and Equifax—that you’re entitled to once per year at no cost. The website for ordering your credit reports is www.annualcreditreport.com.

It’s important to review all three carefully because not all creditors report to all three agencies. A few months after filing your bankruptcy, each of your creditors should notate that the account was included in bankruptcy. If not, it’s a good idea to have that corrected because any line item that appears open but unpaid could lead a potential lender to believe that you’re still responsible for paying that debt.

Your credit report should also identify whether your Chapter 7 bankruptcy case was discharged (your qualifying debts got wiped out) or dismissed. A successful bankruptcy that leads to a discharge has a different effect on a potential lender’s decision to grant you credit than if the bankruptcy had been dismissed, leaving your account liability intact.

It’s a good idea to address any errors you see as soon possible. You can do this by disputing the item, either through the credit bureau’s website or by sending a letter directly.

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